Frigid January weather that has taken the U.S. natural gas market by surprise could result in national storage capacity dipping to bullish 2001 levels by the end of heating season, according to ESAI in its February North American Natural Gas Stockwatch Report.
Following holiday winter storms and snowfall, a blast of Arctic air settled in for a long nap over the eastern two-thirds of the nation—the result of which has been a significant drain on supply over the last few weeks, much larger than previously anticipated.
“Most recent EIA [Energy Information Administration] data reflecting a 247 Bcf draw for the week ending January 24 is the biggest supply reduction that the market has seen since January 1997,” according to Kristin Domanski, Manager of Natural Gas Services at ESAI.
“Even if the month of February brings normal winter temperatures, the market could still reach the end of draw season in late March with stock levels near 20 percent, which is precipitously close to bullish levels of March 2001 following the natural gas winter price spike to $10/MMBtu historic highs,” said Domanski.
“In any case, this fundamental ‘turn for the worse’ is certainly helping to support current futures prices at the Hub.”